Wall Street’s High-Stakes Wager: Who Will Succeed Jerome Powell as Fed Chair?

The Fed chair musical chairs game is on—and the sharks are circling.

As Powell's term expiration looms in 2026, institutional money is already placing bets on his successor. The crypto markets? They're pricing in either a dovish savior or a regulatory grim reaper.

Behind closed doors, hedge funds are running scenario analyses on potential nominees while pretending to care about 'macroeconomic stability.' Because nothing says 'prudent monetary policy' like front-running the political appointment process.

One thing's certain: When the new chair takes the helm, we'll all pretend their academic papers from 2003 somehow predict how they'll handle the next Black Swan event.

Kevin Warsh

Kevin Warsh, a former Fed governor from 2006 to 2011, holds the highest 24% odds at present. He missed out in 2017 when Trump picked Powell, and now he wants to cut interest rates, argues that tariffs “are not inflationary.”

In early July, he told Fox Business that rate cuts were overdue. Yet some economists are skeptical. Neil Dutta of Renaissance Macro called him one of the worst picks, and on CNBC last Thursday, Warsh said, “I don’t think we need continuity when the central bank doesn’t have credibility. We need regime change at the Fed.”

Scott Bessent

Scott Bessent, Trump’s main financial adviser, currently has the odds at 20%

Widely seen as a loyalist, he was flagged by the president as a possible replacement. However, Trump said on Tuesday he prefers Bessent to remain in his current post. When Bessent joined the administration, Wall Street expected him to calm markets, yet he has sided with Trump during stock sell‑offs, insisting that a bit of volatility doesn’t bother them.

Nobel Prize winner Paul Krugman recently questioned his independence, writing that anyone chosen by Trump “will indulge and cheer on every Trump idea, no matter how bad.”

Still, Bessent told Bloomberg on Tuesday, “There’s a formal process that’s already starting. There are a lot of great candidates, and we’ll see how rapidly it progresses.”

Kevin Hassett

Kevin Hassett, who directs the National Economic Council, came in at 12% odds. Hassett has publicly criticized the renovation budget and supported the idea of replacing Powell.

He hasn’t said much about his chances, but he supports cutting rates by up to three percentage points. Trump has praised him as “fantastic.”

Even so, Michael Brown of Pepperstone Group warned that Hassett and other political picks “may struggle to achieve Senate confirmation.”

On July 16, on NBC News, Hasset said, “The president has policy disagreements. He thinks that the Fed has been mismanaged. He’s been discussing his own view about what policy should be, but he’s not disrespecting the independence of the Fed.”

Christopher Waller

Christopher Waller, a current Fed governor, stood at 12% odds. Seen as a dark‑horse candidate, his odds jumped after he said in July that slow private‑sector job growth means the Fed should cut rates at its next meeting.

His approach is viewed as more academic and less political, appealing to investors wary of overt WHITE House influence.

As Warren Pies of 3Fourteen Research noted on July 17, Waller offers “an intellectual consistent/defensible/sound position,” in contrast to what he called the “sycophants” in the running.

In his speech, Waller said that once data revisions are factored in, payroll growth is “near stall speed” and that, with inflation close to target, “we should not wait until the labor market deteriorates before we cut the policy rate.”

For now, traders are keeping an eye on the odds as they change with each new update. Whether Trump ends up replacing Powell or not, which 32% better think will not be announced until December 31st, this fight shows how politics can clash with the Fed’s independence and how closely markets watch every move.

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